Rupee surges to one-month high

As crackdown on currency smuggling continues, it records gains of 0.29%

KARACHI:

The Pakistani currency marked a remarkable surge, hitting an almost one-month high at Rs297.96 against the US dollar in the interbank market on Thursday. This upswing represents the currency’s seventh consecutive working day of gains, attributed to the ongoing crackdown against currency smugglers.

According to data from the State Bank of Pakistan (SBP), the rupee recorded a fresh gain of 0.29%, equivalent to Rs0.86, closing at Rs297.96 against the greenback. This remarkable performance translates to an overall gain of almost 3%, or Rs9.14, in the past seven days.

The currency’s rally also received indirect support due to speculation regarding an upward revision in the interest rate by the central bank. However, the SBP surprised the market by leaving its key policy rate unchanged at the present 22%.

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Another unexpected development emerged from Pakistan’s gold market. For the second consecutive working day, the local bullion pricing body refrained from announcing daily commodity prices, sparking speculation about potential actions against “gold smugglers” or a downward trend in the country's precious metal market, leading to silence from the pricing body.

In response to queries, a member of the body officially confirmed that the last gold price announced on Tuesday at Rs215,000 per tola (11.66 grams) remained unchanged for the time being.

According to the Exchange Companies Association of Pakistan (ECAP), the local currency in the open market regained 1%, or Rs3, reaching Rs298 against the US dollar during the day.

This uptrend in the open market is considered a negative development for gold pricing in the domestic market, as the pricing body factors in the rupee-dollar exchange rate when determining global commodity prices for local markets.

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With this latest rise, the currency has now cumulatively regained Rs30 over eight successive days in the open market.

To put this in context, the currency had sharply depreciated by over 6%, or Rs18.50, in the first three weeks of the caretaker government, causing the rupee to plummet to a record low at Rs307.10 against the US dollar on the prior Tuesday (September 5).

Meanwhile, gold had experienced a significant decline of almost 13%, equivalent to Rs30,400 per tola, over the past two weeks, dropping to Rs209,400 per tola on Monday. On Tuesday (September 12), the All Pakistan Sarafa Gems and Jewellers Association increased the commodity price by Rs5,600, setting it at Rs215,000.

Published in The Express Tribune, September 15^th, 2023.

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